Why You Should Still Invest in US Stocks Despite Market Volatility

Singaporean investors have, in recent years, begun incorporating US stocks into their portfolios. 

With the US market experiencing bouts of volatility, some investors are tempted to sit on cash and wait it out, forgetting that volatility is unavoidable. 

However, waiting for a “safe” entry point could mean missing some of the market’s strongest recovery periods. 

Why US Stocks Remain Attractive to Singapore Investors

Unlike the Singapore market, which offers high dividends from mature businesses, the US stock market offers large listed companies in high-growth sectors. 

Singapore investors can gain access to global leaders such as Alphabet Inc (NASDAQ: GOOGL), Visa (NYSE: V), and NVIDIA (NASDAQ: NVDA). 

These companies operate across major global growth themes like artificial intelligence (AI), semiconductors, and global payment services that don’t have a local equivalent.

US stocks balance Singapore’s income-heavy dividend stalwarts with growth, complementing a typical dividend-focused portfolio. 

A Market Sell-Off Doesn’t Automatically Mean the Investment Thesis Is Broken

Unexpected global events, economic uncertainty and investor sentiment can all cause market fluctuations.

It is important to look beyond share prices and examine metrics such as revenue and earnings growth, free cash flow, and balance-sheet strength. 

For example, Microsoft Corp (NASDAQ: MSFT) reported a 4QFY2026 net income of US$35.8 billion, up 31% year-on-year (YoY), yet its share price has fluctuated wildly. 

The company traded at US$499.70 per share as at the close on 4 September 2026; its 52-week low is US$349.20, and its 52-week high is US$553.72. 

Even with a 20% share-price decline, a company can continue to grow its underlying business.

That said, not every dip is a steal.

Some sell-offs happen because fundamentals have deteriorated. 

Investors who do not know why a stock has fallen might be buying into a value trap. 

The Case for Staying Invested

While short-term share prices can fluctuate sharply, businesses with healthy finances and durable competitive advantages can continue to drive long-term earnings growth.

Investing in US-listed companies does not necessarily mean investing only in the US economy. 

Many US mega-caps generate substantial revenue internationally, giving shareholders indirect exposure to global growth opportunities. 

Many global giants stand at the forefront of transformative secular trends – such as AI – which can unlock new revenue streams.

Despite market volatility, companies like NVIDIA led developments that increased their long-term worth. 

NVIDIA was founded in 1993, but the launch of ChatGPT on 30 November 2022 was what skyrocketed it into a new era, bringing massive demand for its AI graphics processing units (GPUs).

Adjusted for NVIDIA’s 10-for-1 stock split in June 2024, its share price rose from US$15.21 on 23 December 2022 to US$48.83 by 22 December 2023 – a 221% surge in one year. 

As at the close on 4 September 2026, NVIDIA traded at US$230.10, marking a 1,412.8% increase since December 2022.

Why Trying to Time the US Market Is Difficult

Successfully timing the market requires investors to guess when to sell and when to buy again accurately.

Markets can rebound quickly after a dip.

Holding onto cash might mean missing a strong recovery, which can significantly affect long-term returns.  

Inflation also reduces the purchasing power of cash, creating another potential cost of waiting.

Dollar-Cost Averaging Can Help Manage Volatility

Instead of guessing the bottom, invest regularly with dollar-cost averaging (DCA). 

DCA provides a disciplined framework, especially for investors who find market volatility difficult to navigate. 

When prices are lower, the same investment amount purchases more shares; when prices are higher, it purchases fewer shares. 

By spreading purchases over time, investors avoid putting everything into the market at a single point. 

However, DCA does not guarantee profits or eliminate investment losses and risks. 

Should You Buy Individual US Stocks or an ETF?

Exchange-Traded Funds (ETFs) offer investors exposure to a basket of securities, lowering company-specific risk. 

ETFs also offer simplicity since investors don’t need to deep-dive into individual stocks.

An investor buying iShares Core S&P 500 ETF (NYSEARCA: IVV), which tracks the S&P 500 (SPX) index, is effectively investing in the 500 largest US-listed companies. 

Owning a stock is like owning a small part of a listed company. 

Individual stocks offer higher return potential if investors identify strong businesses that can outperform the market. 

For instance, while the three-year annualised return for the S&P 500 index is 19.5%, that of NVIDIA is around 69%. 

However, individual stocks can expose investors to company-specific risks. 

The case in point is PayPal Holdings (NASDAQ: PYPL), an S&P 500 constituent company, where the three-year return is -10.8%.

That said, investing does not have to be an either-or approach.

You can combine both ETFs and individual US stocks to build a portfolio that works best for you. 

What Singapore Investors Should Watch Beyond Share Prices

Even if a US investment rises in US-dollar terms, a stronger Singapore dollar can reduce the value when converted. 

Conversely, a weaker Singapore dollar can increase SGD-denominated returns.  

A company with strong growth prospects can still represent a risky investment if its valuation is exceptionally high.  

US interest rates also have a significant influence on equity valuations.

Higher rates can place downward pressure on these valuations, while falling rates provide support by making future cash flows relatively more attractive. 

The Risks of Investing in US Stocks Today

The S&P 500 has significant exposure to certain themes, with information technology-related companies comprising 37.9% of the entire index. 

An investor might think their portfolio is diversified when they own the index alongside individual technology stocks, when in reality, they face concentration risk.

Some of the most popular US-listed companies could already have substantial expectations for future growth built into their share prices. 

Investing now means you are buying at a higher price, and returns might be more subdued, on top of currency risk due to exchange rates.

US companies also operate within a complex global environment. 

Trade restrictions, technology regulation, and supply chain disruptions can easily affect business operations. 

All these risks can create uncertainty even for companies with strong long-term prospects.

How to Invest Through Volatility

New investors can benefit from starting with a diversified portfolio.

Investing progressively with DCA reduces timing pressures. 

Avoid chasing stocks after large rallies, as strong recent performance does not guarantee further gains.

Existing investors should periodically review whether the original investment thesis remains intact and rebalance large positions. 

Remember that short-term share-price declines do not necessarily mean that the business has deteriorated. 

Income-focused Singapore investors can use US stocks to complement, not replace, their dividend holdings. 

US growth companies may offer lower dividend yields, but they may have greater capital appreciation potential.

Get Smart: Volatility Is Part of the Journey

US stocks will continue to experience market volatility.

However, this does not invalidate their long-term potential.

The smartest investors understand that US equities provide access to global businesses and growth less represented locally, which can complement their dividend-focused portfolio. 

Staying focused on business fundamentals, diversifying adequately, and investing regularly can help build a resilient long-term portfolio.

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Disclosure: Wenting A. does not own any stocks mentioned.

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